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Clifford Chance

Clifford Chance

Briefings

SEC Announces New “Presence Examinations” Targeted at Newly Registered Investment Advisers

11 October 2012

The Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (the “SEC”) announced last month that it would soon begin conducting “presence examinations” of newly registered investment advisers to hedge funds, private equity funds and real estate funds (each, a “registered adviser”).  On October 9, 2012, the SEC began mailing a form letter to select, newly registered advisers to notify them of the new examination program and to prepare them for possible examination (the “SEC Letter”).   Unlike traditional OCIE examinations, the new presence examinations are expected to be risk-based and cover two to three topic areas, selected on the basis of each registered adviser’s business.  Communications from the OCIE staff, including the SEC Letter, indicate that the following areas will be of particular focus: (i) marketing / advertising; (ii) portfolio management; (iii) conflicts of interest; (iv) safety of client assets and (v) valuation.

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